Deck 15: Advertising, Sales Promotions, and Personal Selling

Question 1

What is the difference between an indirect and a direct marketing channel?
2. What are the differences among the three types of vertical marketing systems?
3. How do firms develop strong strategic partnerships with their marketing channel partners?

Answer 1

Marketing Channels
A path which is used by the marketers to transfer the goods and services from production level to consumption level is called as marketing channel.
1.
Direct and indirect marketing channel
Direct marketing channel: When manufacturers directly sell the products to consumers without going through an intermediary, it is called as direct marketing channel.
Indirect marketing channel : When manufacturers sell the products to consumers with the support of one or more intermediaries, it is called as indirect marketing channel.
Differences between direct and indirect marketing channel:
2.
Vertical marketing channel
A marketing channel, in which wholesalers and retailers work together, to deliver products to the consumers is called vertical marketing channel.
Types of vertical marketing channel:
• Corporate vertical marketing system
• Contractual vertical marketing system
• Administered vertical marketing system
Differences among vertical marketing systems
The following are the differences among vertical marketing systems:
In corporate vertical marketing system , the firm manufactures it own products and runs its own retail stores.
In contractual vertical marketing system , the firms which have different levels of marketing channel join together on a contractual basis to acquire coordination and economies of scale.
In administered vertical marketing system , there is no corporate ownership or contractual relationships, but one member of distribution channel controls the power of other members of the distribution channel.
3.
Developing strong strategic partnership
Firms can build a strong strategic partnership with the marketing channel partners in the following ways:
• By delivering the promised amount of products to the organization
• By delivering the products on time without delay, and by creating a reputation in the market

Question 2

What are the marketing channel links associated with each information flow?
2. How do marketing channel members use data warehouses to make decisions?
3. What is EDI and how is it used?
4. Why do some marketing channels use VMI, while others do not?
5. What is the difference between a push and a pull marketing channel?

Answer 2

Marketing Channels
A path which is used by the marketers to transfer goods and services from production level to consumption level is called as marketing channel.
1.
Flow of information in the marketing channel
The following is the flow of information in the marketing channel:
Flow 1: The customer procures or purchases the product from the store.
Flow 2: The store conveys the sales information to the supplier in the market.
Flow 3: The supplier conveys the information to the manufacturer to enhance the future production.
Flow 4: The manufacturer contacts the store to discuss about the purchase details of the customers.
Flow 5: The store provides the details and the best ways to distribute the product to the customers.
Flow 6: The manufacturer communicates to the distributor about the shipment of the product and the distributor communicates to the store about the delivery.
2.
Data warehouse
Data warehouse is a system that helps the organization to collect details about customer purchases. This helps the organization to do future research about the market.
Uses of data warehouses to make decisions
Marketing channels directly deal with the customers and the data warehouse that helps the channel to know more about the customers. Thus, data warehouse helps the marketing channels to know about their customer purchase pattern which helps the organization to plan their marketing process.
3.
Electronic Data Interchange (EDI)
A process of interchanging the confidential business related documents through electronic media is termed as electronic data interchange.
Uses of EDI
The following are the uses of electronic data interchange:
• EDI decreases the cycle time (time between placing an order and receipt of goods).
• EDI develops the quality of communication by maintaining the records of error free data.
• EDI helps in price negotiation and vendor management inventory system.
4.
Vendor-Managed Inventory (VMI)
The inventory management system that helps the manufacturer to maintain the vendor inventory level is termed as vendor-managed inventory system. This helps the organization to avoid overstocking of products in the warehouse.
Reason to use VMI
VMI system is suitable for those products which are not perishable in nature. The products which are perishable cannot be stored for a long period of time. Therefore, vendor - managed inventory system is used by some marketing channels, and not by all organizations.
5.
Differences between push and pull marketing channels
Push marketing channel: Push marketing channels force the retailers or wholesalers to communicate to the customers about the product and its attributes.
Pull marketing channel: Pull marketing channels attract the customers by providing them offers, coupons, and discounts for the purchase of the product.
The following are the differences between push and pull marketing channels:

Question 3

Answer 3

Marketing channel partners like suppliers, stores, wholesalers, distributors play a dominant role in the marketing strategy of a company. In fact all these marketing channel partners are interlinked and interdependent. Their cooperation and coordination is the essence of their business.
Customer can not directly communicate to the manufacturing company, it is the storekeeper or shopkeeper who forwards his communication to the wholesaler then wholesaler to the distributor and through distributor customer feedback, and requirements, complaints or suggestions reach to the manufacturer. Likewise product purchased by a customer crosses the different stages before it reaches to the customer.
Therefore in every aspect of manufacturing process a manufacturing company prefers and implements the suggestive opinions given by the marketing channel partners because without their strategic partnership goals of the company can not be achieved. Thus in order to strengthen this partnership companies use different tactics like introducing promotional offers to retailers, whole sellers and distributors. Advance payments to suppliers, gifting etc.